“The man who can smile when things go wrong
has thought of someone he can blame it on.”
– Arthur Bloch
ACTUAL CASE HISTORY: A few years ago, Margaret called us from Seattle with a rather unusual problem. She was a Regional Sales Director for one of the world’s largest software companies. Though her company employed 21 Regional Sales Directors, and she ranked number one in overall sales, profitability and customer satisfaction, she had been accused of poor performance, and placed on probation. “How,” we wondered, “could Margaret be accused of poor performance?” More importantly, we wondered, “Why would this happen?” We knew something else must be going on.
Margaret sent us her company’s sales report summaries going back three years which supported her view that her sales performance was outstanding. In reviewing the sales report summaries with us, Margaret made casual mention that one aspect of the reports had never made sense to her. In fact, she had raised the issue with the company Chief Financial Officer (“CFO”) a year earlier: why did the company seem to report software sales each month using as their “month” a period of time consisting of 35 days? She had never heard of any other company doing this.
In response to her repeated inquiries, she had been told by a member of the CFO’s team that this was necessary due to some sort of “software accounting rules.” She was also told “This isn’t your business; selling is your business.” Being a naturally inquisitive and persistent soul, Margaret pressed for a better explanation, but had never received one.
One of the reasons Margaret was so successful in corporate software sales was her extensive network of working relations with senior executives at Microsoft, headquartered in nearby Bellingham, Washington, and at other computer-related companies that had sprung up nearby in Microsoft’s “shadow.” Through them, she learned that some of their orders were fulfilled early, some fulfilled late, some never fulfilled, without any apparent reason or rationale. When she asked her manager, the company’s Director of Sales, he told her that production problems caused the delays, something she knew was just plain preposterous.
We represented Margaret in discussions with the company, and easily refuted the notion that she was not performing up to expectations. We met with Martin, the company’s chief employment counsel. Martin was a soft-spoken man, and quite confident in his belief that nothing here was a problem. His view was that Margaret’s sales territory was unique, and so, in turn, her performance expectations should be unique, as well. When we shared with Martin our growing belief that the software sales numbers were being manipulated, Martin became less soft-spoken, and quickly gravitated toward shrill and threatening. He derisively called me a “conspiracy freak.” A few days later, I was informed that Margaret, herself, was under investigation.
What then followed was the most interesting part of the story: one by one, Margaret’s sales people were interviewed by a large Seattle law firm, who had been hired for the “investigation.” The attorneys questioned each sales person about “whether it is true, as it seemed, that Margaret had pressured each of them to fraudulently report sales.” Though Margaret was astounded, I wasn’t surprised. That’s because I had seen this sort of “scapegoating” happen many times before.
This is how it generally goes: first the large, prestigious law firm with impeccable pedigrees and credentials is called in to investigate. Then the large law firm (filled with partners who are former judges and government officials) reviews documents and interviews witnesses, all chosen by them. Then the large law firm with marble hallways and football field-sized conference rooms issues a report – to no one’s surprise – finding one or two mid-level employees to have engaged in errant ways, without the knowledge or participation of senior corporate management. Of course, the report is a summary only; no one gets to see either a written report, or the supposed “evidence” they claim to have collected.
The large law firm in this instance generally followed the usual script, or at least they tried to. Instead, we stymied their plans by thwarting their usual ways. First, before her interview, Margaret provided documents to the investigators by email, so that there was a permanent record stored in their computers of what Margaret had given them. Second, Margaret sent a copy of all of her past emails she had sent inquiring about the issue to the company’s CFO and its General Counsel, to remind them of their own complicity in the matter. Third, with our help Margaret assembled the company’s official policies and procedures that were meant to protect “whistle blowers,” pointing out that they were disregarded in every turn, and establishing that what we were seeing was nothing less than scapegoating and retaliation. Finally, in a memo to the General Counsel, we pointed out that Margaret’s being placed on probation was an obvious attempt to rid the company of someone who was not “going along” with improprieties, but instead asking totally proper questions, and seeking – not fearing – the truth.
In each instance, (a) we made a permanent record of documents and witnesses that supported Margaret’s version of events, frustrating the “investigating” law firm’s ability to control the information they received and (b) we also stressed the potential personal accountability of each of those corporate officers who were acting to hurt Margaret. We pointed out that the company’s own policies, procedures and regulations regarding the receipt of employee concerns about possible improprieties were being disregarded, in fact, subverted. We continually stressed that the facts, the events and the circumstances – the “bricks in the wall of truth” – all supported Margaret’s version of things, and only disputed the version of events of those who sought to scapegoat her. The large, influential law firm’s investigation seemed to run out of gas. Margaret thought that the lawyers were beginning to fear for their own reputations and careers.
Faced with our refusal to allow the large and influential law firm to succeed in their efforts to scapegoat Margaret, and faced, too, with the fear of someone taking what we had found to law enforcement authorities, Martin, the company’s Chief Employment Counsel, changed course. Instead of an investigation, he now suggested a generous severance package for Margaret, something Margaret welcomed, given her concerns about being in close proximity to improper and probably illegal business practices, and an exhibited willingness to blame her for these problems. Our negotiations were simple, and Margaret left the company as soon as she could find a new job, something her network of relations in her industry permitted without delay.
The aftermath: in November, 2006, the company’s CEO was sentenced to 12 years in prison, and personally fined $8 million. The company’s Director of Worldwide Sales and its General Counsel both plead guilty to securities fraud and were given lengthy prison terms. The company agreed to a fine of $225 million.
According to recent press reports, the large, prestigious law firm is still “at large.”
LESSON TO LEARN: As recent press reports confirm, there are those in corporate America, under great pressure to produce greater financial results, who will take steps outside the bounds of propriety, and sometimes even outside the bounds of the law. And, when in danger of being caught, many of these same people will take steps to cover up, or even blame others, for their transgressions. Desperate people will take desperate measures to avoid personal accountability.
If you find yourself either being retaliated against for reporting wrongdoing, or worse, being wrongfully blamed for carrying out the wrongdoing, you need to take swift and bold action. Doing so is not easy, and surely not without risks, but when accused of improper or illegal conduct, you have no alternative.
The secret to avoid being “scapegoated” for corporate wrongdoing is to refuse to allow in-house counsel, Human Resources and large outside law firms to control the investigation. It is really a kind of negotiation, one in which you make clear that “he who goes near the fire may get his own fingers burned.”
Do you know why attorneys in court are constantly trying to say “objection?” Almost always it is an attempt to control the documents and testimony that gets into “the record.” This is an important part of courtroom tactics. These same attorneys practice these “tactics” in their investigations, because “he who controls what is recorded is he who creates history.” And history is not always “the truth.”
Corporate “cheaters” and “blamers” cannot get their way unless they can protect themselves by surrounding themselves with law firms, accounting firms, and public relations firms, who try to control the flow of information and evidence. We have found that efforts to cover up wrongdoing, and to make lower level employees scapegoats, can be defeated, but proactivity, perseverance and creativity are necessary.
If you would like to obtain a “model” memo to help you object to retaliation on the job, [click here].
WHAT YOU CAN DO: These are the ten (10) steps we find most useful in overcoming efforts to scapegoat our clients in the course of corporate cover-ups of wrongdoing:
1. Bear in Mind: Your Company’s Lawyers are Advocates, Not Truth-Seekers: It’s crucial that you bear in mind that your company’s in-house counsel or outside counsel are not tasked with finding out the truth; instead, their primary task is to accomplish what the company’s senior executives seek. They are advocates for whomever they consider their “client,” and more times than not they consider their client “the one who hires them, and pays their bill.” This may sound cynical, and it is, but it is often the true state of affairs. Manage your expectations accordingly.
2. Collect Email Evidence: When faced with allegations of wrongdoing, it’s easy to feel defensive, weak and overpowered. Your greatest strength is the truth, but ONLY IF you can get the truth out. In any investigation, large law firms will always try to control the flow and content of information that reaches their “investigation.” In resisting these efforts remember that “Email is your best and faithful friend.” First, when writing emails, people are often unguarded, and amazingly frank. Second, “email is forever.” That is, it is nearly impossible to indelibly erase an email from computer storage; it’s there forever. Third, new laws require companies to store emails for years, and to take steps to avoid their destruction. Emails constitute great evidence in court. Scour the emails you sent, and the emails you were sent; they contain a great deal of the truth.
3. Digital Documentation Delivery: If you are going to meet with Human Resources, with the company’s General Counsel, or with the company’s outside law firm, before going to the meeting, you should send them by email – preferably scanned into PDF format, because a PDF is near impossible to alter – copies of the documents and emails you are going to give them when you meet. This prevents them from later denying their receipt. Most importantly, this stops them “cold” from claiming “You never gave us that document,” or telling others “He (or she) hid that document from us.” (Yes, that sort of stuff happens all the time.)
4. Digital Testimony Delivery: The same goes for the “testimony” you give during the course of an internal investigation. After you have spent hours or days with the company’s HR or legal counsel giving them your version of the facts, sit down at home at the computer and type up everything you can remember that you were asked, and what you answered. Then send it to your company’s investigators by email – preferably in PDF format. Depth and detail are helpful. If your interview lasts more than one day, you might consider doing this each evening. Then they can’t say, “We were never told that.”
5. Ask that Your Own Attorney Be Present: With very few exceptions, employees do not have a right to have their own attorneys present when their company’s attorneys ask them questions. However, you can request that you be permitted to bring your attorney with you, and if permitted, you should do so. This is a helpful hint for your attorney to use: Most states have an ethical rule that says, in effect, “If Attorney X knows that a person is represented by Attorney Y regarding a certain matter, Attorney X cannot speak to the person about that matter without Attorney Y being present.” So, if your attorney reminds the company’s attorney that you are represented on this matter, it might just convince the company’s attorney to allow your attorney to be present when you are interviewed.
6. Stick with the Truth; Lies are Harder to Remember: There is an old saying that “Liars are like alcoholics: always in recovery.” If you are ever tempted to alter, color or change the truth, try to resist the temptation. It is safest to presume that any variation from the truth in your testimony will be discovered. While you should always listen to and follow the advice of your own attorney, sticking with the truth is always the safest way to go.
7. Emphasize Personal Accountability: Perhaps the greatest reason people “do the right thing” is the fear that they will get caught if they don’t. Conversely, perhaps the greatest reason so many corporate executives fail to “do the right thing” is that they don’t believe that they’ll get caught, or be held personally accountable; instead they expect they will simply pay a fine and deny personal wrongdoing. In your testimony and in your document delivery, don’t hesitate to (a) hold back your belief that “all people are equal in the eyes of the law,” and (b) place blame squarely on the shoulders of those who have “earned” it.
8. Be Super-Careful not to Break any Rules or Violate any Policies: This step is perhaps the hardest step to take, because it is really 1,000 small steps rolled into one. Especially in times like this, when you are being targeted, do your very best to adhere strictly to every possible company rule and policy, ranging from coming to work on time to avoiding using company email for personal use. It is not uncommon for company counsel under great pressure to look carefully for even the most minor and unintended transgression in order to stop your inserting the truth into their “investigation.”
9. Gather Whistle Blower – Anti-Retaliation Rules and Policies: In any game or contest, it is of great value to know the “rules.” In the “corporate scapegoat” context, it is important to understand what “rules” have been established by your company to protect employees from being treated unfairly. Your company’s anti-retaliation, whistle-blower and “speak out” rules and policies are probably to be found in your Employee Handbook, Compliance Manual, or on the company website. Do yourself a favor: gather copies of these, and read them over carefully.
10. Don’t Engage in Extortion: There is a natural tendency to “fight fire with fire,” and as part of that response to make threats against those who threaten you. Many are tempted to express, in one form or another, “I no longer want to work here. Unless you give me a hefty severance package, I will report this to the newspapers, or the police, or the Board of Directors.” The tendency is understandable, but the threat is a crime, and one that could send you to prison. It’s called extortion, that is, a threat to expose or harm someone unless you are given a thing of value. It is something you must avoid doing. While lawyers are often accused of this, it is an acceptable part of their job to say, “My client has a claim against you . . . would you rather settle that claim, or go to court?” For this reason this is one circumstance in which you are strongly advised to consider hiring experienced counsel to handle the matter for you.
P.S.: Act pre-emptively! Avoid being retaliated against! Use our “Pre-emptive, Anti-Retaliation Letter (“PEARL”) to contact the Board Chairperson to let your tormentor know “You Are Being Watched!” “What to Say, and How to Say It,™ just [ click here. ] Delivered by Email – Instantly!
SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Avoiding unnecessary risks to your job, your finances and your reputation, is essential. But it takes more than luck to make that happen. It takes forethought, care and prudence, the essential ingredients in good negotiating.
Always be proactive. Always be creative. Always be persistent. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “reward” and eliminate or reduce employment “risk.” That’s what SkloverWorkingWisdom™ is all about.
A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.
© 2007 Alan L. Sklover. All rights reserved. Commercial use prohibited.